G-20 world needs to look be­yond ul­tra-easy pol­icy

The world's top economies de­clared on late Satur­day that they need to look be­yond ul­tra-low in­ter­est rates and print­ing money to shake the global econ­omy out of its tor­por, while re­new­ing their fo­cus on struc­tural re­form to spark ac­tiv­ity.

A com­mu­nique from the Group of 20 ( G20) fi­nance min­is­ters and cen­tral bankers flagged a se­ries of risks to world growth, in­clud­ing volatile cap­i­tal flows, a sharp fall in com­mod­ity prices and the po­ten­tial "shock" of a Bri­tish exit from the EU. "The global re­cov­ery con­tin­ues, but it re­mains un­even and falls short of our am­bi­tion for strong, sus­tain­able and bal­anced growth," said the com­mu­nique, is­sued at the end of a two-day meet­ing in Shang­hai.

"Mon­e­tary poli­cies will con­tinue to sup­port eco­nomic ac­tiv­ity and en­sure price sta­bil­ity ... but mon­e­tary pol­icy alone can­not lead to bal­anced growth." Fal­ter­ing growth and mar­ket tur­bu­lence have ex­ac­er­bated pol­icy fric­tions be­tween ma­jor economies in re­cent months, and the state­ment also noted con­cerns over es­ca­lat­ing geopo­lit­i­cal ten­sions and Europe's refugee cri­sis. The ref­er­ence to "Brexit" had not been in­cluded in ear­lier ver­sions of the text, ac­cord­ing a se­nior of­fi­cial who had seen var­i­ous drafts, but was added af­ter Bri­tish of­fi­cials pressed for it.

Bri­tons will vote in June 23 ref­er­en­dum on whether to re­main in the Euro­pean Union. "Our view is that it's in the na­tional se­cu­rity and eco­nomic se­cu­rity of the United King­dom, of Europe and of the United States for the United King­dom to stay in the Euro­pean Union," U.S. Trea­sury Sec­re­tary Jack Lew said af­ter the meet­ing.

The G20 min­is­ters agreed to use "all pol­icy tools - mon­e­tary, fis­cal and struc­tural - in­di­vid­u­ally and col­lec­tively" to reach the group's eco­nomic goals. Chris­tine La­garde, man­ag­ing di­rec­tor of the In­ter­na­tional Mon­e­tary Fund, said she sensed re­newed ur­gency among the group's mem­bers for col­lec­tive ac­tion, warn­ing that with­out it there was a risk that the re­cov­ery could de­rail.

But there was no plan for spe­cific co­or­di­nated stim­u­lus spend­ing to spark ac­tiv­ity, as some in­vestors had been hop­ing af­ter mar­kets nose­dived at the start of 2016. Over the course of the two-day meet­ing in Shang­hai com­ments by pol­i­cy­mak­ers made clear the di­ver­gence of views on the way for­ward. Fi­nance chiefs had agreed that "the mag­ni­tude of re­cent mar­ket volatil­ity has not re­flected the un­der­ly­ing fun­da­men­tals of the global econ­omy", the com­mu­nique draft said.

To pep up the global econ­omy, faster progress on struc­tural re­forms "should bol­ster po­ten­tial growth in the medium term and make our economies more in­no­va­tive, flex­i­ble and re­silient", it said. "We are com­mit­ted to fur­ther en­hanc­ing the struc­tural re­form agenda," it added.